Recent Issues

Vol.18/1 (2012, June)
Corporate Governance, Financial Slack and Firm Performance: A Comparative Study between US and UK
Author SANGHOON LEE
Keywords Corporate Governance, Financial Slack, Organizational Slack, GMM Regression
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This paper presents an empirical analysis of the relationship between financial slack and firm performance using a large panel data set of the U.S. and the U.K. firms. Conducting dynamic GMM regressions, the empirical analysis finds that there are the negative relationship between slack and performance in the U.S. and the positive relationship in the U.K. These empirical findings support the hypothesis that the relationship between slack and performance differs across corporate governance systems. The novelty of the paper lies in its demonstration of the conclusion on the role of corporate governance in the relationship between slack and performance as well as the fact that we could obtain the result by comparing the two countries—the U.S. and the U.K—that have been regarded as belonging to a single corporate governance system.
Vol.17/2 (2011, December)
Environmental Scanning Behavior of the Top Managers: A Regulatory Focus Model
Author Theresa S. Cho
Keywords Regulatory focus theory, top management teams, managerial cognition, diversity
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Drawing on regulatory focus theory (Higgins 1997), I propose a model of firm’s environmental scanning behavior. Specifically, I explore a firm’s environmental scanning behavior as a function of the motivational mindset of the firm’s top management team. Prior research has shown that diversity of the TMT’s composition has an impact on the firm’s strategic behavior. I take this premise further to suggest that: 1) a TMT’s cognitive diversity is likely to differ in the collective mindset in their degree of promotion- or prevention-focus; 2) this differential mindset is likely to mediate the processing style of the environment, and subsequently differentially drive the firm’s strategic choice.
Vol.17/2 (2011, December)
CEO Inside Debt and Costs of Bank Debt Financing
Author Joong Ho Han
Keywords inside debt, managerial agency, costs of debt, debt contracts, loan terms
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This study examines the role of CEO’s pensions and deferred compensations by exploring their impacts on pricing and non-pricing contract terms of bank loans. CEO’s inside debt, defined as the sum of defined benefit pension and deferred compensations, pays fixed amounts at periodic intervals. We find that higher inside debt holdings significantly reduce both loan rate spreads and demands for collateral. We also find that such effects are particularly pronounced under weak external governance proxied by a degree of anti-takeover defenses. Overall, our results support the idea that debt-like incentives for CEOs increase convergence of interests between managers and creditors.
Vol.17/2 (2011, December)
The Effect of Local Holdings on Audit Policy and Outcomes
Author Bok Baik
Keywords none
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This paper examines whether local block holdings are associated with audit policy and outcomes. For local investors are long-term investors and they tend to invest a larger portion of their total investment in local companies, I posit that local block holders will be dedicated investors and have strong incentives to monitor management. Consistently I find that companies with local block holders are less likely to have unclean/going-concern opinions, and more likely to have long-term relationships with auditors. In addition, although I find weak evidence that the existence of local block investors affects audit fees, I do not observe any significant difference of audit fees between firms with local block holdings and firms with nonlocal block holdings. Overall, this paper shows that information advantage of local investors can have real effects on audit process through monitoring activities.
Vol.17/2 (2011, December)
Cooperative Exchange with Substitutable Ties and Its Competitive Outcomes
Author Jonghoon Bae
Keywords Social Capital, Tie Substitution, Cooperation
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With a model of tie substitution, a construct that reflects each actor’s evaluation of his or her social relations or networks, this study proposes that each actor’s subjective evaluation of objective structural constraints may facilitate or delay the realization of structural constraints in general and the division of cooperative benefits in particular. It shows the following: first, ego with few (perceived) substitutable ties is likely to accept the unequal allocation of cooperative benefits; second, symmetry in tie-substitution at the global network suppresses (aggravates) competition for the division of cooperative outcomes when individual tie-substitution is low (high).
Vol.17/2 (2011, December)
Brand Equity Model and Marketing Stimuli
Author Hong-Youl Ha
Keywords marketing stimulus, brand equity process, satisfaction, loyalty
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The intangibility of services differentiates product brands from its characteristics. Building brand equity in the context of services, is therefore crucial to the conduct of a firm’ marketing strategies and plays an important role in increasing consumers’ perceptions. This study attempts to address relationships between brand equity and marketing stimuli. In particular, the study aims to draw theoretical and managerial implications from comparisons between bank services and discount malls. The empirical tests use a structural equation model (bank vs. discount mall) to support the research hypotheses. The findings show that marketing stimuli have a different influence on brand equity between the two different categories. Results from comparison between two different settings indicate that satisfaction plays a critical role as a mediator between antecedents of brand equity and outcomes. As a result, the model increases understanding of brand equity processes and extends existing knowledge of academic scholars in different service categories. This article discusses future research directions and managerial implications
Vol.17/2 (2011, December)
Corporate Governance and International Portfolio Investment in Equities
Author Jinsoo Lee and Seongwuk Moon
Keywords Corporate Governance, International Portfolio Investment in Equities
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Previous articles examined international portfolio investments either by a single investor or to a single destination. We examine the determinants of international equity investment patterns using multiple pairs of source and host countries. Specifically, we investigate how the corporate governance institutions in investing and recipient countries are associated to equity investment and divestiture using the 2006 and 2008 Coordinated Portfolio Investment Survey (CPIS) data. We find that source countries buy equities in host countries with strong governance more than in host countries with weak governance. We also find that investors from strong governance countries disproportionately sell more their equities in weak governance countries during the recent economic crisis. However, investors from weak governance countries do not demonstrate such divestiture pattern.
Vol.17/1 (2011, June)
Effects of High Performance Work Systems, Entrepreneurship and Organizational Culture on Organizational Performance
Author Jee Young Seong
Keywords High Performance Work Systems, Entrepreneurship, Organizational Culture, Organizational Performance
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Focusing on Korean small and medium-sized firms, this paper examines the relationships between high performance work systems (HPWSs), entrepreneurship and organizational culture and organizational performance. The findings reveal that HPWSs and entrepreneurship are significantly related to performance. Also an interaction effect of organizational culture and entrepreneurship on performance is found. These results have both theoretical and practical implications. In accordance with the resource-based view, sustained superior performance can be attributed to unique capabilities, such as human resource management (HRM) and entrepreneurship. From a practical perspective, these findings indicate that HPWSs are applicable in Korean settings.
Vol.17/1 (2011, June)
Mutual Fund Tournaments and Structural Changes in an Emerging Fund Market: The Case of Korea
Author Kwangsoo Ko and Yeonjeong Ha
Keywords Segment Tournaments, Family Tournaments, Korean Fund Market, Structural Changes, Conflicts of Interests
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The objective of this study is to evaluate the mutual fund tournament, i.e., an agency issue between fund managers and investors, in the presence of structural changes in an emerging fund market. This study extends BHS (1996), Busse (2001), and Kempf and Ruenzi (2008b). A switching regression model is employed to investigate the effects of structural changes on the mutual fund tournament. We find that structural changes in the Korean fund market alter the tournament type from a segment to a family tournament. We believe that the family tournament comes from more competition since 2005 within large families. Our evidence of tournaments is robust to return frequency. Our results indicate that regulators and fund families should exercise greater caution than is currently the case to prevent conflicts of interests between fund investors and managers.
Vol.17/1 (2011, June)
Understanding Green Purchase: The Influence of Collectivism, Personal Values and Environmental Attitudes, and the Moderating Effect of Perceived Consumer Effectiveness
Author Yeonshin Kim
Keywords Collectivism, Personal Values, Environmental Attitudes, Perceived Consumer Effectiveness, Green Purchase Behavior
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This study investigates determinants of green buying behavior. Using structural equation modeling, the effects of collectivism, values and attitudes on ecological purchase and their hierarchical relationships are investigated. Furthermore, a moderated multiple regression is applied to test whether the link between attitude and behavior is enhanced by the degree of perceived consumer effectiveness (PCE). The results suggest that collectivism is important in predicting green purchase. The positive influence of collectivism on consumer greenness flows through selftranscendence values. However, PCE fails to moderate the strength of the relationship between environmental attitudes and green purchase behavior. Implications for public policy and marketing communication efforts are discussed.
Seoul Journal of Business
ISSN 1226-9816 (Print)
ISSN 2713-6213 (Online)